Will it extrapolate to Double Digits?

Macro Perspectives: Fri 10 Dec 21

We will get the November inflation report today.

For October, the headline number was a 0.9% monthly change in prices - if we extrapolate that out over twelve months, we have double-digit annual inflation.

The November number is expected to be hot as well, at +0.7%.

Which will lead us into next week's big Fed meeting, with expectations that they will announce a faster taper and project a timeline toward a rate hike as soon as March. The question becomes, assuming conditions hold, how aggressively will the Fed go after inflation? Economic expansions tend to end when the Fed kills the patient.

With that being said, if we look at the Atlanta Fed model, it continues to hold up well. For Q4, the model is projecting almost 9% growth.

If this number were to hold up, we could see 6% economic growth for the full year 2021 - that would be the fastest growth since 1984.